Independent contractor may be misclassified

I have been an independent sales contractor for a medium-size company for three years. The bosses like my production and even gave me a bonus. Yesterday, they gave me a specific checklist of duties — that require things like extra driving and treating clients to lunch — that must be performed for each of my accounts. Due to me being independent, they won’t reimburse me for the extra expenses. As long as I’m doing my job well, can they legally dictate how I do my job?

Jill Chasson

Coppersmith, Schermer, Brockelman

This question touches on a topic that is being given increasing attention by state and federal agencies: Proper classification of workers. There are several tests for whether a worker is an independent contractor or an employee, but in general, the more direction and control a business exercises over the way in which a worker does his or her job, the more likely it is that the worker should be classified as an employee.

Improper classification of an employee as an independent contractor can result in significant liability to the hiring business for items such as taxes, unemployment-insurance premiums and employee benefits that were not paid or provided.

Factors that can affect a determination of appropriate classification include: Whether the business has the right to give instructions to the worker; the nature and level of detail of any instructions given; how the worker is evaluated; whether the services performed are a key activity of the business; the expected duration of the relationship; and whether the worker is able to work for multiple businesses at the same time. Also, whether the worker has an opportunity to make a profit or loss, bears his own expenses and supplies his own equipment needed to do the work.

In your case, while it’s legal for the company to give you a checklist of duties, the new requirements should be considered in the full context of your relationship with the company to evaluate whether you are appropriately classified as an independent contractor.

Darrel Scott Jackson

Matheson & Matheson

If you are truly an independent contractor, then you and the company are free to negotiate over issues like who pays for client lunches. You could refuse to pay, but then the company could choose to find someone else to do the work.

From the relationship you’ve described, however, it appears that you may actually be an employee of the company, even though you have been labeled an “independent contractor.” The fact that your bosses dictate how you do your job and that you have worked exclusively for your company for three years, are both factors that weigh in favor of you being an employee.

If you are an employee, then the company should be covering the cost of client lunches, as well as providing unemployment insurance, workers’ compensation protection and Medicare and Social Security contributions. You would also be covered under laws prohibiting workplace discrimination. Some employers avoid these additional labor costs by misclassifying employees as independent contractors.

You may want to consult with an experienced employment attorney to determine whether you have been misclassified and what, if any, employee benefits you may be entitled to.

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